United States District Court, Northern District of Illinois, E.D
November 14, 1985
CENTAUR INSURANCE COMPANY, PLAINTIFF,
MISSION INSURANCE GROUP, INC., PACIFIC REINSURANCE MANAGEMENT CORPORATION, SAYRE & TOSO, INC., MISSION RE MANAGEMENT CORPORATION AND MISSION INSURANCE COMPANY, DEFENDANTS.
The opinion of the court was delivered by: Bua, District Judge.
Before this Court is defendants' combined motions to stay this
action pending arbitration, to dismiss certain defendants, and to
change venue. Plaintiff Centaur Insurance Company ("Centaur")
seeks a declaration of the various parties' rights and
liabilities pursuant to a series of insurance contracts.
Jurisdiction is based on 28 U.S.C. § 1332. For the reasons stated
herein, this Court grants Centaur's motion to change venue.
Further, this Court transfers the action to the United States
District Court for the Central District of California. Because of
the transfer, this Court declines to consider defendants' motions
to stay and to dismiss.
Centaur, an Illinois corporation, reinsures risks undertaken by
other insurance companies. Over the last few years, Centaur
entered into a number of reinsurance agreements with various
defendants to indemnify those defendants. Most of the agreements
contained arbitration provisions that selected Los Angeles,
California as the sole cite for arbitration. All five defendants
have their principal places of business located in Los Angeles,
The defendants have incurred substantial losses and have called
upon Centaur to honor its reinsurance obligations under the
agreements. Defendants demand that Centaur pay over $9,000,000.
Centaur contends its obligation to the defendants is
substantially less than $9,000,000. On July 26, 1985, Centaur
filed suit in the Circuit Court of Cook County, Illinois, seeking
a declaration of the various parties' rights
and liabilities. Defendants removed the action to this Court. On
August 22, 1985 the defendants filed suit in the United States
District Court for the Northern District of California seeking to
compel arbitration over this issue.
The appropriate starting point for a motion to change venue is
the statute itself. 28 U.S.C. § 1404(a) provides:
For the convenience of parties and witnesses, in the
interest of justice, a district court may transfer
any civil action to any other district or division
where it might have been brought originally.
This provision is designed to eliminate wasted time, energy, and
money. In addition, it protects litigants, witnesses, and the
public against inconvenience and expense. Continental Grain Co.
v. Barge FBL-585, 364 U.S. 19, 80 S.Ct. 1470, 4 L.Ed.2d 1540
(1960). The issue before this Court is whether Centaur's action
should be transferred to the Central District of California.
Centaur's desire to bring this action in the Northern District
of Illinois is entitled to substantial weight under § 1404(a).
Ronco, Inc. v. Plastics, Inc., 539 F. Supp. 391, 401 (N.D.Ill.
1982). The decision to transfer, however, lies within the sound
discretion of the trial judge. Wm. A. Smith Contracting Co. v.
Travelers Indemnity Co., 467 F.2d 662 (10th Cir. 1972). The
moving party has the burden of proving that the suit should be
transferred, and must establish that the balance weighs strongly
in favor of the proposed transferee district. Id. at 664.
A 1404(a) motion to change venue requires a two-step analysis.
First, this Court must determine whether the proposed transferee
district is a district in which Centaur's claim could have been
brought originally. An action may be brought in any district
court that has proper venue, subject matter jurisdiction, and can
issue effective service of process upon defendants.
28 U.S.C. § 1391(a) sets forth the districts where venue is
proper. § 1391(a) states that when a plaintiff's action is
founded solely on diversity of citizenship, proper venue lies in
those judicial districts where all defendants or plaintiffs
reside, or where the claim arose. Applied to the facts in this
case, venue is proper in either the Northern District of Illinois
(where plaintiff resides) or the Central District of California
(where all defendants reside).
In addition, the proposed transferee district is proper only if
the Court has jurisdiction over the subject matter of this case
and the defendants are amenable to service of process issued by
the transferee court. American Telephone & Telegraph Company v.
Milgo Electronic Corporation, 428 F. Supp. 50 (S.D.N.Y. 1977). In
this action, the California court's jurisdiction is founded on
diversity of citizenship. Additionally, the defendants in the
instant case are amenable to process in California since all
defendants have their principal places of business located in Los
Angeles, California. Consequently, this Court finds that
Centaur's claim could have been brought originally in California
since venue is proper in California, the California court has
subject-matter jurisdiction, and the defendants are amenable to
process in California.
The second step of the analysis is to determine whether the
transfer is necessary for the "convenience of parties and
witnesses, in the interest of justice." This Court finds that the
convenience of the parties is better served by transferring this
case to the Central District of California. As noted, all five
defendants' principal places of business are located in Los
Angeles, California. Additionally, Centaur's parent company is
subject to jurisdiction in the California Courts. (Plaintiff's
memo at 11). The various reinsurance agreements between Centaur
and the defendants designate California law as the law that must
be applied to this dispute. Moreover, the arbitration provisions
in the reinsurance agreements select Los Angeles, California as
the sole venue for arbitration. This Court believes
that Centaur would not be unduly burdened by having to prosecute
the case in California in light of Centaur's willingness to
accept the inconvenience of arbitrating in California. Finally,
six of the seven agreements involved in the instant case are
presently the subject of a pending action in the Central District
of California. This case must be transferred because the
interests of justice disfavor the duplication of judicial effort
and the possibility of inconsistent results.
Centaur argues that the case should not be transferred because
the plaintiff's choice of forum is entitled to substantial weight
under § 1404(a). This Court agrees that Centaur's choice commands
substantial weight. However, the totality of all the factors
clearly point to California as the more convenient forum and
Illinois as an unduly burdensome forum. Accordingly, defendants'
motion to change venue is granted.
This Court grants defendants' motion for change of venue. In
addition, this Court transfers this case to the United States
District Court for the Central District of California.
IT IS SO ORDERED.
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